Made in the US: Manufacturing moving onshore — Donald B. Rosenfield

MIT Sloan Senior Lecturer Donald Rosenfield

MIT Sloan Sr. Lecturer Donald Rosenfield

From the Boston Globe

The health of the US manufacturing sector has been at the top of the news agenda for some time. Factory closures are highly publicized; businesses that move their production overseas are publicly shamed; and politicians often find themselves on the defensive.

True, the United States has seen a dramatic reduction in manufacturing jobs over the past decade, and many of those jobs are not coming back. (Garment-making and smartphone assembly will likely stay in places such as China.)

Despite all the negativity, though, US manufacturing is in good shape. Industrial production remains near its all-time peak, as measured by the Federal Reserve Board, and the sector will likely continue to thrive. More companies will set up — or indeed keep — their production here as the manufacturing sector becomes more efficient, innovative, and technologically sophisticated to allow for greater product variety.

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Increasing manufacturing jobs in the U.S. requires innovation and variety — Donald Rosenfield

MIT Sloan Sr. Lecturer Don Rosenfield

In the last 10 years, there has been a dramatic reduction in manufacturing jobs in the U.S. due to a combination of factors, such as the economic crisis and foreign competition. But manufacturing jobs can return to the U.S., and a key component of that return involves innovation to facilitate product variety.

Companies that manufacture products abroad typically do not offer significant product variety, as the support costs — like inventory, markdowns and returns — are too high. It’s more economical to produce a narrow product line when you’re shipping to warehouses from across an ocean. Read More »